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Commercial  Treaties  &  Trade  Agreements 
fncident  to  War,  Peace  and  Reconstruction 


By 


Fred  Brown /Whitney 

Chairman,  Deselektro  Co, 

Chairman,  American  Manufacturers  Export  Association's  Committee 

on  Commercial  Treaties  and  Trade  Agreements 


Address  delivered  at  Annual  Convention 

American  Manufacturers  Export  Association 

New  York,  October  30-31,  1918 


1.  PEACE  REVIVES  TREATY  RIGHTS 

A  declaration  of  war  causes  non-intercourse  in  trade  be- 
tween opposing  belligerents  and  supersedes  treaties  involving 
the  rights  of  aliens  in  trade;  however,  unless  such  rights  are 
waived  by  the  parties  to  treaties  or  new  or  repugnant  stipula- 
tions are  made  in  other  treaties,  such  rights  revive,  usually,  in 
their  operation  at  the  return  of  peace. 

2.  BRITISH  INTENTION  TO  DENOUNCE 

COMMERCIAL  TREATIES 

(a)  It  is  therefore  important  to  take  note  of  a  recent  re- 
mark in  Parliament  by  the  Chancellor  of  the  Exchequer  to  the 
effect  that  Great  Britain  intends  to  follow  the  policy  of  France 
in  denouncing  ALL  commercial  treaties  providing  for  the  most 
favored  nation  treatment. 

(b)  The  customary  most  favored  nation  clause  in  a  com- 
mercial treaty  stipulates  that  each  party  thereto  shall  grant  to 
the  other,  in  respect  to  the  subject  matter  of  the  treaty,  the 
same  rights,  privileges  and  immunities,  as  may  thereafter  be 
granted,  as  to  the  same  matter,  to  the  most  favored  nation. 

(c)  Such  action,  if  taken,  will  leave  Great  Britain  free  to 
introduce  a  policy  of  preference  for  colonial  products  in  the 
British  market  and  adopt  a  general  tariff  under  which  to  nego- 
tiate special  commercial  arrangements  with  the  Allies  and  bar- 
gain with  neutrals. 

3.  FRANCE  TO  ABROGATE  ALL  CONVENTIONAL 

AGREEMENTS. 
On  May  14,  1918,  the  French  Government  announced  the 
decision  of  the  Council  of  Ministers  to  abrogate  all  conven- 


tional  arrangements  with  foreign  countries  affecting  economic 
relations,  including  those  regarding  commerce,  navigation,  and 
industry. 

4.     FRENCH-CANADIAN  CONVENTION 
TERMINATED 

(a)  Notice  has  been  given  that  the  French-Canadian  Con- 
vention of  1908  is  to  be  terminated  on  May  14,  1919.  The  Act 
required  12  months  notice.  Each  Government  granted  sub- 
stantial tariff  concessions  to  imports  from  the  other  country. 
Canada  applied  intermediate  rates  to  certain  French  products 
and  special  rates  for  other  articles,  these  rates  corresponding 
in  most  cases  to  the  British  preferential  rates.  France  applied 
her  minimum  rates  to  certain  Canadian  products. 

(b)  France  has  a  dual  tariff  system  under  w^hich  both  the 
general  and  minimum  duties  are  fixed  by  law. 

Prior  to  1909,  the  United  States  products,  included  under 
25  different  tariff  numbers,  were  admitted  into  France  at  the 
minimum  rates  of  duty.  These  numbers  relate  to  animal  and 
vegetable  products. 

Under  the  Act  of  March  29,  1910,  the  President  of  France 
was  authorized  to  admit  at  the  minimum  rates  the  above  25 
articles,  except  mineral  oils,  and  at  intermediate  rates  68  addi- 
tional numbers,  of  which  44  covered  manufactured  articles  :  the 
principal  of  which  are; — paper,  hides  and  skins  prepared  by 
vegetable  tanning,  boot  and  shoe  uppers,  trunks  of  wood  and 
cardboard,  articles  of  skin  and  leather,  made-up  furs,  milling 
machinery,  rolling  mills,  hoisting  machinery,  pulleys,  bala  ices, 
scales,  material  for  roadway  for  steam  and  other  railv;ays, 
presses,  fine  cutlery,  iron  and  steel  tubes,  tools  of  copper,  wood 
turners'  wares,  vehicles  other  than  railways,  carriages  properly 
so  called,  vehicles  for  commerce,  agriculture  and  cartage,  cycles 
and  parts  thereof,  belting,  tubes,  valves  and  other  articles  of 
india  rubber  or  gutta  percha,  brush-makers'  wares,  and  toys. 
These  articles  pay  the  general  rates  in  force  prior  to  April  1, 
1910. 

5.     FRANCE  GAVE  GERMANY  FAVORED 
NATION  TREATMENT 

In  the  pre-U-boat  period,  Germany  enjoyed  in  France  the 
most  favored  nation  treatment  as  a  by-product  of  the  Franco- 
Prussian  War  of  1871.  The  United  States  does  not  enjoy  this 
treatment. 

For  example,  a  result  of  this  : — American  paraffine  required 
$3  more  customs  duty  than  the  same  article  imported  from 
Germany.  A  similar  preference  existed  for  the  more  important 
benzol  imports  into  France.  The  same  was  true  of  any  num- 
ber of  other  articles  of  American  origin,  particularly  manufac- 
tures. 


France  gave  the  United  States  only  a  very  small  part  of  the 
minimum  tariff;  however,  the  entire  minimum  tariff  was 
granted  under  normal  conditions  to  all  other  countries  of  com- 
mercial importance. 

6.  LACK  OF  A  TREATY  AND  WAR  SHIFTED  THE 
U.  S.  TRADE  STATUS  in  Russia.  Upon  the  abrogation  by 
the  United  States  of  its  commercial  treaty  of  1832  and  the  tech- 
nical ending  of  the  most  favored  nation  treatment  provided 
for  therein,  Russia  continued  to  give  to  the  United  States  all 
the  tariff  concessions,  granted  to  any  foreign  country.  The 
valuable  concessions  were  the  conventional  rates  of  tariff  pro- 
vided for  by  the  commercial  treaties  between  Russia  and  Ger- 
many and  Austria-Hungary.  War  suspended  these  treaties 
and  caused  the  withdrawal  of  the  conventional  rates  and  the 
application  of  the  general  rates  plus  a  war  surtax. 

The  products  in  which  France  and  Italy  were  principally  in- 
terested in  were  still  admitted  under  the  conventional  rates  pro- 
vided for  by  the  treaties  with  Russia ;  these  concessions  covered 
specialties  which  were  of  little  value  to  the  United  States. 

Germany  did  not  give  the  United  States  the  tariff  conces- 
sions granted  Sweden  and  Japan  which  prior  to  the  war  were 
extended  to  practically  all  other  countries.  The  United  States 
did  not  get  favored  nation  treatment  from  Canada,  Haiti  and 
Salvador.  In  Canada,  American  products  were  subject  to  the 
general  tariff  while  many  commercial  rivals  of  the  United 
States  got  intermediate  rates.  All  appreciate  that  our  revenue 
policies  have  a  great  influence  in  the  exchange  of  tariff  conces- 
sions and  that  our  officials  are  governed  largely  thereby ;  how- 
ever, it  may  serve  a  useful  purpose,  to  take  note  that  if  the 
United  States,  in  negotiating  commercial  treaties,  is  to  depend 
upon  reference  to  most  favored  nation  treatment  and  the 
tariff  concessions  embodied  in  treaties  with  other  countries, 
typical  American  specialties  may  not  secure  proper  concessions 
and  in  some  cases,  the  general  concessions  that  the  United 
States  gets  from  a  given  country  may  be  minimized  by  a 
change  in  its  commercial  relations  with  a  third  country. 

Special  separate  commercial  treaties  adapted  to  the  dis- 
tinctive U.  S.  articles  may  prove  beneficial;  however,  expert 
knowledge,  skill,  and  caution  are  essential  to  effect  such  a 
plan. 

7.  THE  OLD  GERMANY-AUSTRIA  COMMERCIAL 
TREATY  was  to  expire  in  1917  but  the  war  has  produced  a 
condition  which  indicates  the  formation  of  an  economic  union 
in  lieu  of  the  ordinary  treaty  relations. 

8.  THE  BREST  LITOVSK  TREATY  and  the  German 
treaties  with  the  Ukraine  and  Finland  exempt  future  German 
concessions  to  Austria-Hungary  from  the  operation  of  the  most 

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favored  nation  treatment.  Austria-Hungary  made  similar  pro- 
visions in  relation  to  Germany  when  peace  was  concluded  with 
Russia. 

The  Premier  of  Australia  has  stated  that  under  the  Brest- 
Litovsk  treaty,  Germany  prohibits  Russia  from  imposing  duties 
or  preventing  the  export  of  minerals  and  timber;  however, 
Russia  must  allow  Germany's  goods  to  enter  Russia  under  the 
most  favored  nation  treatment.  The  events  of  the  hour  seem 
to  lessen  the  importance  of  what  the  Central  Powers  think  they 
have  done  with  Russia  and  the  Treaty  of  Peace  may  modify 
the  contemplated  relations  between  the  Central  Powers,  es- 
pecially in  relation  to  economic  unions. 

9.  THE  GERMAN  -  AUSTRIA-HUNGARY  ECONOMIC 
UNION  MOVEMENT  naturally  comes  from  the  economic 
isolation  of  the  Central  Powers  and  the  fear  of  economic  dis- 
criminations from  the  Allies  in  accordance  with  the  resolu- 
tions adapted  at  the  Economic  Conference  of  the  Allied  Gov- 
ernments at  Paris  on  June  14-17,  1916.  Among  such  resolu- 
tions, is  the  following: 

"The  Allies  declare  themselves  agreed  to  conserve  for 
the  Allied  countries,  before  ALL  others,  their  natural 
resources  during  the  whole  period  of  commercial,  in- 
dustrial, agricultural  and  maritime  reconstruction,  and 
for  this  purpose  they  undertake  to  establish  SPECIAL 
ARRANGEMENTS  to  facilitate  the  interchange  of 
these  resources." 

11.  THE  UNITED  STATES  IS  NOT  A  PARTY  TO  THE 
ECONOMIC  CONFERENCE,  although  it  has  since  June  14, 
1916,  joined  the  Allies  in  fighting  with  arms,  the  Central  Pow- 
ers ;  hence  the  United  States  now  stands  technically  in  the  ''all 
other'-."  class  so  far  as  the  conservation  and  interchange  after 
the  war  of  economic  resources  is  involved. 

What  action,  if  any,  the  United  States  may  take  in  regard 
to  becoming  identified  with  the  policies  outlined  by  the  Paris 
conference  of  the  Allies  or  in  using  economic  boycotts  and 
trade  discriminations  against  the  Central  Powers  or  any  other 
Nations  is  of  great  interest  and  consequence  to  all  American 
international  traders,  especially  manufacturers. 

12.  SOME  TYPICAL  AMERICAN  VIEWS  OF  ALLI- 
ANCES AND  BOYCOTTS  are  disclosed  in  the  following 
public  statements: — 

(a)  On  October  31,  1916,  shortly  after  the  Economic  Con- 
ference of  the  then  Allies,  the  American  Manufacturers  Ex- 
port Association,  in  annual  convention  assembled,  unanimously 
adopted  the  following  resolutions: 

"The  export  manufacturers  of  the  United  States  seek 
in  international  trade,  only  such  gains  as  this  Country 

4 


is  economically  entitled  to  and  have  neither  desire  nor 
design  to  profit  unfairly  by  conditions  created  by  the 
European  conflict. 

It  is  hoped  that  the  armed  conflict  in  Europe  will 
not  be  followed  by  an  economic  war  that  will  place 
arbitrary  restrictions  on  international  commerce  and  in- 
dustry and  the  export  manufacturers  believe  that,  in 
the  formulation  of  commercial  treaties,  we  should  insist 
upon  due  regard  for  our  rights  and  our  opportunities, 
thus  assuring  to  our  commercial  and  financial  interests 
full  protection  to  our  rights  abroad.  The  economic 
basis  of  our  foreign  trade  is  our  ability  to  produce 
goods  to  meet  the  requirements  of  international  mar- 
kets at  competitive  prices  and  the  mutual  interests  of 
the  export  manufacturers  and  the  employees  thereof 
demand  efficient  workmanship  as  well  as  adequate 
wages." 

(b)  On  October  10,  1917,  after  the  United  States  had  joined 
the  Allies  in  the  armed  conflict  against  the  Central  Powers, 
the  American  Manufacturers  Export  Association  unanimously 
adopted  the  following  resolutions  at  the  1917  annual  conven- 
tion, 

**The  Association  endorses  especially  that  part  of 
President  Wilson's  answer  to  the  Pope  which  states, 
'Punitive  damages,  the  dismemberment  of  empires, 
the  establishment  of  selfish  and  exclusive  economic 
leagues,  we  deem  inexpedient  and  in  the  end  worse 
that  futile,  no  proper  basis  for  a  Peace  of  any  kind, 
least  of  all  an  enduring  Peace'." 

The  1917  resolutions  then  repeated  the  1916  resolutions 
which  you  have  just  listened  to  and  then  resolved  further, 

"With  the  hope  of  securing  ultimate  tranquillity  in 
international  trade  and  freedom  of  individual  action  for 
all,  the  Association  favors:  1.  The  establishment  of  a 
tribunal  to  decide  international  differences;  2,  The 
United  States  taking  the  initiative  in  agreeing  with  other 
Nations  to  bring  economic  pressure  on  any  Nation  or 
Nations  which  resort  to  military  measures  without  first 
submitting  their  differences  to  an  international  tribunal 
and  to  use  concerted  military  force  in  the  event  that 
this  economic  pressure  be  not  sufficient  to  compel  Na- 
tions which  have  proceeded  to  war  to  desist  from  mili- 
tary operations  and  submit  the  questions  at  issue  to  an 
international  tribunal." 

The  1917  resolutions  were  adopted  after  a  referendum 
questionnaire  had  been  considered  by  each  of  the  some  700 
odd  members  of  the  Association.  The  questionnaire  speci- 
fically asked  whether  or  not  the  members'  present  views  dif- 


fered  from  the  1916  resolutions  in  respect  to  economic  restric- 
tions and  boycotts. 

No  member  expressed  a  change  of  views  since  the  United 
States  joined  in  the  conflict  at  arms. 

(c)  THE  U.  S.  CHAMBER  OF  COMMERCE  VOTED 
AN  ECONOMIC  WAR,  under  certain  conditions,  against 
Germany,  on  February  26,  1918,  by  the  adoption,  by  a  vote  of 
1,204  to  151,  of  its  referendum,  number  twenty-three,  resolu- 
tions which  are  to  the  general  effect  that  the  Chamber  calls 
German  business  men's  attention  to  the  conditions,  that  the 
size  of  Germany's  future  armament  depends  on  her  after-war 
receipts  of  raw  materials  and  profits  from  her  foreign  trade 
and  to  prevent  an  excessive  armament,  the  American  people 
will  enter  an  economic  combination  against  Germany  unless 
Germany's  Government  becomes  a  responsible  instrument  con- 
trolled by  the  German  people. 

The  resolutions  further  urge  German  business  men  to 
study  the  situation  and  to  cooperate  to  avert  a  disastrous  eco- 
nomic war  and  to  make  certain  a  lasting  Peace. 

The  American  Manufacturers  Export  Association,  the 
Associated  Manufacturers  of  Electric  Supplies,  the  Associated 
Manufacturers  and  Merchants  of  New  York  State,  the  Silk 
Association  of  America,  the  Ohio  Manufacturers  Association, 
the  Philadelphia  Board  of  Trade,  the  Philadelphia  Bourse,  and 
the  Philadelphia  Maritime  Exchange  declined  to  vote  on  the 
referendum.  The  National  Association  of  Manufacturers 
voted  in  the  negative  and  took  the  position  that  an  economic 
boycott  would  be  an  unwarranted  interference  in  a  matter  of 
international  relations. 

The  Merchants  Association  of  New  York  voted  in  the 
negative  and  took  the  position  that  the  proposition  is  not  the 
most  appropriate  of  effective  means  of  obtaining  the  coopera- 
tion of  the  business  men  of  Germany  in  an  endeavor  to  avert 
a  disastrous  economic  war  after  the  termination  of  the  present 
hostilities.  The  Association  indicated  that  its  opinion  was  that 
the  preambles  were  so  drawn  as  to  convey  a  suggestion  of 
threat  that  failure  to  cooperate  might  result  in  a  declaration 
by  the  United  States  of  an  economic  war  in  order  to  cause 
changes  in  Government  conditions  in  Germany. 

The  affirmative  vote  came  largely  from  the  many  local 
chambers  which  have  little,  if  any  substantial  technical  knowl- 
edge of  international  trade.  The  affirmative  vote  resulted 
apparently  from  a  sentimental  desire  to  try  to  hit  the  Kaiser 
and  his  kind  in  any  and  all  ways  anybody  suggested.  As  indi- 
cated, the  great  American  business  and  manufacturing  asso- 
ciations, which  are  expert  in  foreign  trade  affairs,  did  not 
look  with  favor  upon  an  economic  war  by  the  United  States 
to  limit  the  armament  or  cause  changes  in  one  Government  in 
Germany.     It  would  seem  that  the  normal  American  manu- 


facturer  and  international  trader  regards  the  armament  or 
dis-armament  of  Germany  or  any  other  country  more  of  a 
political  or  military  problem  than  an  economic  one. 

13.  GENERAL  PERSHING  AND  ADMIRAL  SIMS  ARE 
HANDLING  GERMANY,  with  their  American  armed  forces 
and  foreign  brothers-in-arms,  in  such  a  military  manner,  that 
Germany's  armament  and  Government  will  not  vitally  concern 
the  World  for  a  few  generations,  at  least,  after  Peace;  hence 
many  hope  that  the  subjects  raised  by  referendum  number  23 
of  the  U.  S.  Chamber  of  Commerce  can  be  set  aside  safely 
in  order  that  all  international  economic  and  trade  subjects  may 
be  treated  solely  upon  their  technical  merits  and  regulated  by 
normal  commercial  treaties,  rather  than  by  war  treaties  or  eco- 
nomic alliances  which  might  add  to  the  puzzle  of  the  political 
balance  of  power  in  Europe,  the  economic  balance  of  power 
of  the  Globe,  or  the  division  thereof  into  trade  zones  to  be 
dominated  by  this  or  that  group  of  nations. 

14.  PRESIDENT  WILSON  OPPOSED  ECONOMIC 
COMBINATIONS  on  September  27,  1918,  in  opening  the 
Fourth  Liberty  Loan  at  New  York;  he  stated  in  part, 

''Fourth,  and  more  specifically,  there  can  be  no  spe- 
cial selfish  economic  combinations  within  the  league 
and  no  employment  of  any  form  of  boycott  or  exclu- 
sion except  as  the  power  of  economic  penalty  by 
exclusion  from  the  markets  of  the  World  may  be 
vested  in  the  league  of  nations  itself  as  a  means  of 
discipline  and  control." 

These  are  precisely  the  principles  favored  in  the  1916  and 
1917  resolutions  of  the  American  Manufacturers  Export  Asso- 
ciation. 

President  Wilson's  third  of  the  so-called  fourteen  Peace 
terms,  is  as  follows, 

"The  removal,  as  far  as  possible,  of  all  economic  bar- 
riers and  the  establishment  of  an  equality  of  trade 
conditions,  among  all  the  Nations  consenting  to  the 
Peace  and  associating  themselves  for  its  maintenance." 

Among  others,  the  Central  Powers  have  unconditionally 
accepted  President  Wilson's  principles  on  economic  combina- 
tions regarding  international  trading. 

15.  CUSTOMS  TARIFFS  ARE  NOT  CLASSED  AS 
ECONOMIC  BARRIERS  unless  their  purpose  is  to  discrimi- 
nate, as  such,  between  Nations. 

It  would  seem  possible  to  remove  all  economic  alliances 
and  combinations  between  Nations;  however,  it  would  prob- 
ably be  impossible  to  remove,  if  anybody  classifies  them  ?s 
barriers,  customs  tariffs  formulated  to  meet  the  needs  of  rev-- 
enue,  the  protection  of  a  standard  of  living  or  a  national  insti.nct 

7 


of  self-preservation  through  the  conservation  and  use  at  home 
of  natural  resources  of  a  Nation. 

16.  WHAT  FOREIGN  COMPETITORS  ARE  DOING 
during  hostilities,  and  apparently  planning  to  do  thereafter, 
interests  the  average  American  international  trader  more  than 
the  unsettled  economic  features  of  a  Peace  treaty  or  of  a 
league  of  Nations. 

17.  BUSINESS  MEN  DETERMINE  TREATIES 
in  the  last  analysis  in  reference  to  commerce  and  trade. 

The  ordinary  business  man  creates  international  situations 
and  conditions  which  form  the  basis  of  international  inter- 
course and  the  foundation  for  treaties  and  tariffs  regulating 
the  same. 

Trade  customs  and  practices  often  cast  a  die  that  cannot 
be  altered ;  hence  it  may  be  beneficial  to  briefly  make  a 

18.  REVIEW  OF  THE  INTERNATIONAL  TRADE  SIT- 
UATION. 

(a)  The  American  situation,  during  hostilities,  and  there- 
after, is  outlined  in  the  words  of  James  A.  Farrell  to  the  For  • 
eign  Trade  Council: — 

"The  sacrifices  that  are  being  cheerfully  endured 
today  by  men  engaged  in  foreign  commerce  in  the 
necessary  curtailment  of  their  business  through  the 
conservation  of  shipping  are  an  earnest  of  the  eleva- 
tion of  method  and  of  purpose  which  will  control  the 
conduct  of  our  external  trade  in  the  future.'* 

(b)  On  September  16,  1918,  before  the  Senate  Finance  Com- 
mittee, a  manager  of  a  Chamber  of  Commerce  controlling  one 
of  the  great  American  industries  stated  in  effect: — that  the 
export  markets  of  the  World  so  long  controlled  by  Germany 
are  now  open  to  the  United  States  industry  and  can  be  forever 
held  if  the  demands  can  now  be  filled;  that  exports  must  be 
and  properly  are  the  salvation  of  that  American  industry ;  that 
a  foreign  Government  has  requested  its  manufacturers  to  ex- 
port, if  possible,  sixty  per  cent,  of  their  production ;  that  the 
American  industry  has  today  upon  the  wharves  of  New  York 
City  three  hundred  units  which  were  purchased  for  shipment 
to  a  far  distant  South  Pacific  Ocean  port;  that  the  American 
industry  cannot  get  the  Commission  of  that  foreign  Govern- 
ment in  the  United  States  to  let  the  units  go  forward  to  its 
colony;  that  the  American  industry  is  in  a  position  to  supply 
eighty-five  per  cent,  of  the  demand  in  districts  named;  how- 
ever the  manufacturers  abroad,  with  the  sanction  of  their  Gov- 
ernment, have  formed  a  corporation  and  Germany  has  done 
identically  the  same  thing;  that  these  corporations  are  for  the 
express  purpose  of  controlling  the  export  business  of  the 
World  in  these  articles  after  the  war. 


(c)  This  incident  perhaps  reveals  the  international  desires 
and  designs  of  traders  abroad. 

(d)  It  has  been  announced  that  Germany  and  Austria- 
Hungary  have  drafted  a  common  customs  tariff  for  the  two 
countries;  however,  no  substantial  detailed  information  is 
public.  A  natural  presumption  is  strong  that  an  economic 
union  is  provided  for 'and  that  any  disparity  in  industrial 
development  will  be  offset  by  a  temporary  tariff  and  the  use 
of  cartels  to  keep  competition  within  certain  districts. 

There  are  substantial  indications  of  control  by  the  Govern- 
ment during  reconstruction  of  hides,  leather,  fats,  oils,  textile 
fibers  and  rubber.  Apparently  there  will  be  Government  domi- 
nation of  the  purchase,  distribution,  manufacturing,  warehous- 
ing, sale,  and  consumption  and  prices,  of  textile  raw  materials, 
semi-manufactures  and  finished  products,  involving  cotton, 
wool,  silk,  artificial  textile  fibers,  flax,  hemp,  jute,  paper  and 
cellulose  yards. 

German  interests  in  Libau,  Russia,  are  trying  to  make  an 
agreement  with  Russia  with  regard  to  common  railway  tariffs 
to  all  Baltic  ports  in  the  hope  that  Libau's  competitive  possi- 
bilities will  be  further  strengthened.  A  German  committee 
of  experts  has  been  studying  the  Baltic  provinces  of  Russia 
to  develop  their  agricultural  resources. 

(e)  The  FRENCH  GOVERNMENT  has  long  main- 
tainel  a  Government  monopoly  in  tobacco  and. matches.  There 
are  indications  that  there  may  be  added  to  these  monopolies, 
petroleum,  sugar  and  spirits. 

In  the  past,  commercial  treaties  have  largely  been  to  regu- 
late individuals  in  international  intercourse;  the  introduction 
on  a  large  scale  of  Government  monopolies.  Government  con- 
trol, and  Government  participation  in  business,  creates  new 
conditions  in  negotiating  commercial  treaties  arid  trade,  agree- 
ments. 

The  reconstruction  in  France  is  a   Government  business. 

Before  the  war,  the  French  lands  invadtd  by  the  enemy 
furnished  France  with  production,  as  follows :  iron  ore  00%  ; 
pig  iron  83%  ;  steel  75%  ;  coal  70%  ;  combed  wool  94%  ;  linen 
thread  90%  ;  sugar  65%.  A  greater  part  of  the  buildings  and 
machinery  therefor  in  these  industries  will  probably  have  to 
be  repaired  or  replaced ;  also  innumerable  chemical  and  fer- 
tilizer works,  textile  plants,  flour  mills,  printing  plants,  pot- 
tery works,  glass  works,  and  ice-making  plants. 

The  replacement  cost  is  estimated  at  at  least  three  ^times 
the  original  cost  which  exceeds  one  billion  dollars. 

The  Government  has  announced  that  the  war  damage  to 
these  factories  is  a  charge  on  the  National  as  a  whole.  The 
Central  Bureau  for  Industrial  Purchases  for  the  Invaded 
Regions  has  been  established.  The  Government  has  voted 
already  fifty  million  dollars  to  be  used  by  the  Bureau,  which 


is  authorized  to  buy,  store,  and  distribute  materials  and  ma- 
chinery among  the  damaged  factories. 

Much  machinery  must  be  made  to  order.  There  will  be 
needed  immense  amounts  of  construction  materials  such  as 
iron,  steel,  bricks,  lumber,  cement,  copper,  and  zinc.  Stocks  of 
iron  ore,  pig  iron,  cotton,  linen,  and  wool,  will  be  accumulated 
as  soon  as  possible.  The  Bureau  will  pay  freight,  insurance, 
and  handling. 

Nothing  is  being  bought  yet. 

There  is  a  desire  to  have  group  selling  by  American  manu- 
facturers because  it  is  difficult  to  deal  with  innumerable  Amer- 
ican factories  in  each  line. 

Pending  the  reconstruction  of  the  French  factories,  the 
people  must  import  to  a  substantial  degree  the  articles  which 
the  factories  will  ultimately  produce  for  domestic  and  foreign 
consumption. 

The  subject  and  items  are  of  interest  to  the  American  manu- 
facturer because  of  the  trade  opportunities  and  because  France 
may  find  it  expedient  to  make  tariflf  modifications  for  at  least 
a  period  after  the  war. 

(f)  According  to  a  statement  by  the  President  of  the 
Board  of  Trade,  the  British  Government  may  decide  to  pro- 
hibit, except  under  license,  the  importation  of  all  foreign  dyes 
for  ten  years. 

The  Government  has  contracted  with  the  Australian  Gov- 
ernment for  the  control  of  the  whole  output  of  zinc  concen- 
trates for  ten  years  after  the  war. 

A  Board  of  Trade  Committee  has  decided  that  a  general 
embargo  on  exports  to  enemy  countries  after  the  war  or  a 
continuation  of  the  present  system  of  rationing  neutrals  is 
iniTjracticable  and  inexpedient  but  that  a  policy  of  joint  control 
by  the  British  Empire  and  the  Allies  during  the  transition 
period  of  certain  products  might  be  adopted  to  carry  out  the 
resolutions  of  the  Paris  Economic  Conference.  The  products 
mentioned  are  cotton,  cotton  yarns,  wool,  tops,  and  yarn,  jute, 
coal,  oil,  seeds  and  nuts,  hides  and  tanning  materials,  flax, 
hemp,  and  timber. 

(i)  There  has  been  introduced  in  Parliament  a  bill  to 
continue,  with  modifications,  for  three  years  after  the  war, 
certain  powers  in  relation  to  imports  and  exports.  The  pow- 
ers are  the  usual  war  powers  of  prohibiting  the  importation 
or  exportation  of  goods  of  any  class,  description  or  origin,  or 
produced,  or  manufactured  in  whole  or  in  part,  in  any  coun- 
try specified  in  an  order  by  the  Board  of  Trade  which  can 
make  exceptions  and  grant  licenses.  Any  proclamation  or 
order  made  during  the  present  war  prohibiting  or  restricting 
the  importation  or  exportation  of  goods  shall  continue  in 
force  until  three  years  after  the  war;  subject  to  licenses 
granted  or  revoked. 

10 


I 


'  War  embargoes  usually  end  with  a  treaty  of  peace;  how- 
ever, this  bill,  if  enacted,  will  project  the  war  restrictions, 
three  years  beyond  the  termination  of  armed  hostilities,  to 
such  persons,  countries  and  goods  as  the  Board  of  Trade  in 
its  wisdom  may  determine. 

(j)  The  President  of  the  British  Board  of  Trade  in 
April,  1918,  announced  that  at  the  close  of  war  practically  the 
whole  of  the  trade  and  industrial  activity  of  the  country  would 
in  some  form  be  controlled  directly  or  indirectly;  the  control 
to  be  abandoned  when  the  national  position  would  permit. 
He  did  not  see  how  it  was  possible  in  the  national  interests 
that  the  railways  and  canals  should  revert  to  their  pre-war 
s.tate. 

The  London  Chamber  of  Commerce  has  criticised  the 
Government  for  its  methods  in  controlling  the  import  trade 
during  the  war  and  for  its  failure  to  cooperate  with  the  busi- 
ness interests.  Its  official  pubHcation  has  warned  the  pubhc 
against  the  danger  of,  ''perpetuating  after  the  war  the  methods 
of  expediency  which  may  have  been  justified  during  the  war." 

The  London  Economist  and  the  Manchester  Guardian 
have  argued  against  the  resolutions  of  the  Paris  Economic 
Conference. 

(k)  Lord  Balfour's  Committee  has  pointed  out  that  the 
United  States  has  entered  the  war  since  the  Paris  conference 
in  June,  1916,  thereby  causing  very  important  changes  in  inter- 
national relations.     Lord  Balfour's  Committee's  report  states, 

"It  is  ''^  *  *  *  *  a  question  how  far  a  temporary  community 
of  political  interests — and  even  the  long  duration  of  such  a 
community  of  political  interests  as  we  may  hope  for  in  some 
cases — can  in  itself  afford  a  secure  basis  for  a  permanent  com- 
mercial policy." 

(1)  In  September,  1918,  the  American  Commercial 
Attache  at  London  reported  in  effect  that  the  Chancellor  of 
the  Exchequer  has  announced  to  Parliament,  that  arrange- 
ments being  made  with  the  Dominion  representatives  for  the 
control  of  essential  raw  materials  are  to  be  the  basis  of  begin- 
ning negotiations  with  other  countries. 

The  Attache  remarked  that  it  is  expected  that  representa- 
tions will  be  made  to  the  United  States  and  other  Allied 
Countries  for  common  action. 

Lord  Robert  Cecil,  Undersecretary  of  State  for  Foreign 
Affairs  and  Minister  of  Blockade  recently  upheld  the  right 
of  each  friendly  power  to  protect  its  own  economic  interests 
by  protective  tariffs  and  other  safeguards. 

(m)  The  possibility  of  Great  Britain  adopting  a  protec- 
tive tariff  policy  is  foreshadowed  in  a  recent  statement  by  the 
American  Chamber  of  Commerce  in  London.  The  attitude  of 
Lord  Cecil  may  be  of  more  importance  than  was  attached  to  it 
at  the  time  in  England  or  abroad. 
•  II 


(n)  Recently  an  American  newspaper  correspondent  re- 
ported from  Paris  as  follows : 

"the  facts  of  the  past  few  days  make  it  necessary  to 
come  back  on  the  economic  policy  which  the  present 
Allies  are  bound  to  follow  after  the  war.  Some  weeks 
ago,  Mr.  Rutherford  in  the  House  of  Parliament  gath- 
ered up  all  these  facts  into  a  natural  conclusion — 'DIF- 
FERENTIAL TARIFFS  AND  PREFERENTIAL 
TREATMENT.'  Lloyd  George,  in  the  name  of  the 
British  Government,  has  now  adopted,  this  conclusion 
within  the  British  Empire,  that  is,  for  England  and  all 
British  Dominions.  This  translated  into  American 
terms  means  that  the  United  States  will  have  to  MAKE 
SEPARATE  COMMERCIAL  AGREEMENTS  AND 
TREATIES  with  EVERY  foreign  country  and 
dominion." 

If  this  American  correspondent's  conclusions  are  correct, 
it  would  seem  that  our  Government  officials  and  the  Senate 
are  to  have  a  rather  large  task  on  their  hands  and  that  it  is  to 
the  interest  of  American  manufacturers  to  keep  a  weather 
eye  to  windward. 

(c)  The  American  Government  has  stated  in  a  current 
public  document  that, 

(o)  "The  State  Department  has  long  been  engaged  in 
drafting  commercial  treaties — work  to  which  the  com- 
paratively new  United  States  Tariff  Commission  is  sub- 
stantially contributing  in  its  recognized  field  of  survey- 
ing various  American  industries  with  a  view  of  ascer- 
taining their  tariff  needs.  All  told,  there  has  been  a  very 
considerable  amount  of  quiet  and  effective  work  done 
toward  the  future." 

(p)  No  particulars  have  been  made  public;  however, 
President  Wilson  has  announced  these  general  principles  : — 

"Each  member  of  the  Association  of  Nations  may 
have  to  protect  its  citizens  in  one  way  or  another  after 
the  war,  but  our  aim  must  be  a  comprehensive  arrange- 
ment of  hberal  intercourse  with  all  members  of  the  As- 
sociation by  which  each  one  of  us,  while  preserving  his 
own  natural  security,  may  contribute  to  meet  the  needs 
and  aid  in  the  development  of  his  fellow  members.  Nor 
of  course,  can  our  arrangement  for  mutual  assistance 
exclude  all  competition,  though  we  are  most  anxious 
that  cooperation  should  be  the  keynote  of  our  commer- 
cial relations." 

19.  If,  as  some  of  the  American  correspondents  abroad  be- 
lieve, we  are  to  face  protection  in  England,  denunciation  of 
commercial  treaties,  bargaining  tariffs  and  the  general  elimi- 


4 
I 


nation  of  the  most  favored  nation  treatment  among  Nations, 
it  may  prove  beneficial. 

TO  TAKE  AN  INVENTORY  OF  UNITED  STATES  RE- 
SOURCES, financial,  raw  materials,  and  manufactures,  with 
the  hope  that  our  vision  may  be  clearer  and  our  cooperation 
greater  when  the  foreigner  presents  his  trading  points  in  nego- 
tiations for  special  tariff  conventions  or  new  commercial 
treaties. 

(a)  The  United  States'  estintated  wealth  exceeds  the  com- 
bined wealth  of  Great  Britain,  France,  Russia,  Italy  and 
Japan — our  Allies  in  the  armed  conflict  with  the  Central  Pow- 
ers ;  the  national  wealth  of  which  is  about  forty-two  per  cent, 
of  the  wealth  of  the  United  States. 

(b)  At  the  start  of  the  Fourth  Liberty  Loan,  the  national 
debt  of  the  United  States  was  about  five  per  cent,  of  its  na- 
tional wealth,  while  the  Central  Powers  averaged  ten  times  that 
of  the  United  States.  Japan's  percentage  was  about  4.6  per 
cent.  The  average  percentage  of  our  other  Allies  was  eight 
times  that  of  the  United  States. 

(c)  Since  the  war  started  in  Europe,  the  United  States 
perfected  its  Federal  Reserve  system  under  which  there  has 
been  gathered  a  mass  of  gold  as  colossal  and  impregnable  as 
Gibraltar,  and  upon  which  there  has  been  based  a  flexible  cur- 
rency system  of  an  imperishable  type. 

Nothing  in  the  world  is  more  secure  than  the  bonds  of  the 
United  States  Government. 

(d)  The  National  City  Bank  of  New  York,  the  Guaranty 
Trust  Co.  of  New  York,  and  other  combinations  of  no  less 
progressive  and  energetic  banks  have  pioneered  abroad  with 
branch  baiiks  which  were  made  possible  by  the  Federal  Reserve 
Act,  and  amendments  thereto.  England  is  consoHdating  her 
great  banks  in  order  to  meet  the  post-bellum  trade  needs ;  it  is 
fair  to  presume  that  the  United  States  bankers  will  do  what- 
ever is  essential  in  the  way  of  consolidation  and  coordination. 

(e)  Before  peace  comes,  the  indications  are  that  the 
United  States  will  have  loaned  its  AlHes  at  least  eight  bilhon 
dollars  at  rates  which  will  produce  an  annual  interest  of  be- 
tween say  three  and  four  hundred  million  dollars.  The  United 
States  has  reduced  its  pre-war  obligations  to  Europe  to  a  neg- 
Hgible  sum  and  has  created  a  Merchant  Marine  second  to  none 
with  the  result  that  the  United  States  can  cart  its  own  products 
to  foreign  markets  without  paying  freight  to  Europe ;  the  net 
result  is  that  the  principal  and  interest  on  the  war  loans  must 
be  paid  by  Europe  in  the  form  of  securities,  or  gold,  or  goods, 
or  the  same  must  be  reinvested  abroad  in  the  reconstruction 
work  or  other  foreign  enterprises  and  securities. 

(f)  If  paid  in  gold,  the  inflation  of  our  currency  might 
bring  undesirable  conditions  and  the  drain  on  Europe  might 

13 


render  foreign  systems  so  unstable  that  the  reflex  action  would 
be  harmful  to  many  interests  in  the  United  States. 

(g)  If  paid  in  goods,  American  labor  will  not  get  the 
wages  resulting  from  the  production  and  fabrication  of  such  a 
class  of  goods. 

(h)  If  paid  in  raw  materials  from  the  colonies  of  Euro- 
pean countries  which  have  few,  if  any,  materials  for  export 
themselves,  the  American  producer  of  like  competitive  ma- 
terials will  not  make  the  gains  therefrom  and  American  labor 
will  not  be  employed  thereon. 

(i)  Being  now  the  great  creditor  Nation  of  the  world,  the 
natural  tendency  will  be  to  emulate  England's  example  of  the 
past  in  the  form  of  investing  abroad  and  developing  great  for- 
eign enterprises  which  will,  presumably  to  a  substantial  de- 
gree, use  American  manufactures  and  men,  to  manage  the 
same. 

(j)  Fair  commercial  treaties  will  be  essential  to  protect 
the  investments  of  the  Unitecf  States  abroad  and  safeguard  our 
interests  in  the  raw  materials'  markets  of  the  world,  especially 
if  there  is  to  follow  the  war,  economic  alliances  based  upon 
preferential  distribution  of  such  classes  of  materials. 

(k)  Excepting  Canada's  nickel,  India's  jute,  France's  an- 
timony, Germany's  potash  salts  and  to  some  extent  the  rubber 
and  wool  of  some  British  colonies,  the  United  States  so  far  as 
the  European  Powers  are  concerned,  is  practically  a  self-sus- 
taining economic  unit. 

Offsetting  the  exclusive  use  of  nickel,  jute,  antimony  and 
potash  salts,  the  United  States  largely  dominates  the  industry 
of  Europe  and  the  world  in  cotton,  copper  and  petroleum.  Cot- 
ton is  still  king  in  the  economic  world  and  will  reign  until  there 
is  a  fundamental  change  in  the  soil,  climate  and  population  of 
the  globe. 

(1)  Without  the  foodstuffs  and  raw  materials  of  Russia 
and  the  Americas,  Europe  might,  in  a  comparative  sense,  fam- 
ish and  fade  away  industrially ;  hence  it  is  not  likely  that  any 
serious  discriminations  or  economic  alliances'  measures  will 
militate  seriously  against  the  substantial  interests  of  the  United 
States. 

Europe  has  little,  if  anything,  herself,  with  which  to  drive 
tariff  bargains  with  the  United  States,  as  will  appear  from  a 
consideration  of  the  following  domestic  production  of  impor- 
tant food-stuffs  and  industrial  raw  materials  of  the  countries 
now  at  war. 

(m)  The  United  States  stands  first  in  the  production  of 
corn,  coal,  pig  iron,  iron  ore,  copper,  lead,  zinc,  silver,  alumi- 
num, phosphate  rock,  tobacco  and  mineral  oils,  and  second  in 
wheat,  oats  and  gold. 

(n)  Russia  stands  first  in  wheat,  rye,  barley,  oats,  flax 
fiber,  hemp,  wool,  and  manganese,  and  second  in  mineral  oils 
and  tobacco. 

14 


(o)  Germany  and  Austria-Hungary  combined  stands  first 
in  sugar,  potatoes  and  potash  salts,  and  second  -in  barley,  rye, 
coal,  pig  iron,  iron  ore,  lead,  zinc  and  flax  fiber.  Germany  pur- 
chased in  ore  state  a  number  of  non-ferrous  metals  and  refined 
them. 

(p)  The  United  Kingdom  stands  first  in  tin  and  nickel 
from  her  colonies,  while  France  stands  first  in  antimony  and 
second  in  phosphate  rock  and  aluminum. 

(q)  The  exports  of  the  United  States,  based  upon  pre- 
war conditions,  were  about  as  follows : — 

(r)  Cotton  and  petroleum  normally  furnished  more  than 
a  third  ;  provisions  and  bread-stuffs  one-eighth ;  copper  together 
with  tobacco,  one-twelfth;  unfinished  manufactures  (raw  ma- 
terials exclusive  of  those  mentioned)  approached  one-fifth. 

(s)  Foreign  countries  must  buy  from  the  United  States 
the  foregoing  products  and  consequently  about  three- fourths 
of  the  United  States  exports  sold  themselves  and  tended  to 
control  their  own  terms  of  sale  and  delivery. 

(t)  The  United  States  exports  in  normal  times  of  finished 
manufactures  approximated  one- fourth  of  the  total  exports ; 
this  is  a  very  small  percentage  in  comparison  with  England 
and  with  Germany,  whose  principal  exports  just  before  the  war 
were  manufactures  and  not  raw  materials  and  staples  which 
enabled  the  United  States  to  be  the  world's  second  export 
nation. 

(u)  Little  England  was  the  first  export  nation  before 
the  war. 

(v)  A  substantial  but  diminishing  part  of  the  United 
States  manufactures  exported  were  patented  articles  which 
like  staples  tended  to  control  their  own  terms  of  sale  and 
delivery. 

(w)  Based  upon  pre-war  figures,  and  conditions,  the  per 
capita  exports  of  the  United  States  as  a  whole  were  at  least 
a  quarter  less  than  those  of  Germany  and  of  England,  each 
of  which  was  increasing  total  exports  at  a  rate  which  was 
much  greater  than  that  of  the  United  States. 

(x)  The  bulk  of  the  English  and  German  exports  being  man- 
ufactures, the  comparative  increase  of  the  United  States  fin- 
ished manufactures  was  insignificant.-  It  was  about  18  per  cent. 

(z)  The  United  States  is  about  thirty  times  larger  in 
area  than  England  and  seventeen  times  larger  than  Germany, 
whose  population  before  the  war  was  about  a  third  less 
than  that  of  the  United  States,  whose  population  was  about 
twice  that  of  England. 

20.     LITTLE  LAND  AND  MANY  PEOPLE 
forced  England  to  colonize  and  exploit  many  parts  of  the  globe 
and  Germany  to  send  many  to  Africa,  South  America  and  the 
Far  East. 

J5 


The  comparatively  little  European  countries  demanded  big 
armies  to  keep  ^ut  next-door  neighbors  and  the  net  result  was 
that  immense  sums  had  to  be  raised  annually  for  the  army  and 
navy. 

The  farming  and  mineral  lands  in  European  countries,  ex- 
cepting Russia,  could  not  fill  the  war  chests,  but  the  factories, 
with  foreign  fields  to  exploit,  could  and  did  largely  and  at 
the  same  time  kept  the  dense  population  profitably  employed. 
All  Europe  was  at  its  wits'  ends  to  preserve  the  balance  of 
power  and  at  the  same  time  make  both  ends  meet ;  for  those 
purposes  it  was  a  matter  of  life  and  death  to  have  foreign  mar- 
kets in  which  the  immense  over-production  of  the  factories 
could  be  disposed  of;  the  result  was  that  the  United  States 
had  no  easy  task  when  trying  to  increase  exports  of  finished 
manufactures  in  markets  that  Europe  appropriated  for  her 
needs,  which  were  real  and  not  fancied.  More  than  a  half  of 
the  English  population  was  engaged  in  factories  and  about  a 
quarter  of  the  United  States  population  worked  in  factories. 

England's  exports  of  prime  importance  were  cotton  goods, 
iron  and  steel,  coal,  woolen  goods,  machinery,  chemicals  and 
miscellaneous  textiles. 

21.  THE  COST  OF  LIVING  IN  THE  UNITED  STATES 
was  about  a  fifth  higher  than  in  Germany  and  forty  per  cent, 
higher  than  in  England.  Nominal  wages  in  the  United  States 
were  about  double  those  in  England. 

The  average  wages  were  at  least  a  fifth  lower  in  Germany 
than  in  England.  I  base  my  remarks  upon  personal  experi- 
ence of  more  than  a  decade  in  Europe  and  the  United  States, 
where  I  was  engaged  in  manufacturing  enterprises.  The 
American  workman  got  more  and  better  food.  The  American 
workman  had  a  better  home  and  more  time  for  recreation  and 
in  the  last  analysis  probably  saved  more  than  his  foreign  com- 
petitor got.  The  people  of  the  world  constantly  strive  for  less 
working  hours  and  greater  wages  per  hour. 

Combination,  consolidation  and  coordination  in  industry  is 
a  world-wide  movement.  Economic  self-sufiBciency  and  na- 
tional control  of  industry  are  attracting  many  minds  in  Eu- 
rope. The  extension  of  Government  participation  into  trade 
and  industry  are  subjects-  of  the  hour  abroad. 

The  United  States'  population  is  yearly  increasing  and  de- 
manding more  domestic  food-stufifs  and  more  work  in  the 
American  factories;  an  economic  result  is  that  the  United 
States  must  send  less  food-stuffs  abroad  and  will  want  to  ex- 
port more  finished  manufactures.  South  America  and  Russia 
may  do  much  for  England  in  supplying  food-stuffs  and  raw 
materials ;  however,  the  natural  tendency  may  be  that  the  cost 
of  Hving  will  increase  faster  in  England  than  in  the  United 
States,  which  can  greatly  increase  food-stuffs  and  materials  for 
domestic  use.    An  economic  tendency  may  be  that  England  will 

i6 


'have  to  make  greater  efforts  to  compete  in  foreign  markets 
with  manufactures  in  order  to  secure  funds  or  means  to  ob- 
tain the  ever-increasing-in-cost  food-stuffs  which  are  not 
grown  at  home.  Competition  in  many  cases  may  mean  cheaper 
prices  and  a  resultant  lowering  in  wages  and  the  standard  of 
living  in  order  to  overcome  the  handicaps  in  food-stuffs  and 
the  costly  importation  of  raw  materials  for  manufacturing. 

England's  needs  of  raw  materials  are  imperative  and  the 
suggested  plans  of  closer  economic  relations  with  the  colonies 
are  the  outgrowth  of  necessity  which  is  a  law  unto  itself. 

What  will  be  the  effect  upon  American  wages  of  men  work- 
ing on  manufactures  that  enter  competitive  international  mar- 
kets is  a  subject  of  grave  concern. 

What  will  be  the  ultimate  standards  of  living  and  comfort 
for  the  American  artisans,  is  a  question  for  all  to  answer. 

22.  TREATIES  MAY  REFLECT  THE  ECONOMIC 
WANTS  OF  NATIONS  because  in  one  form  or  another  com- 
parative wages,  standards  of  living  and  comfort  and  degrees 
of  health  and  the  preservation  thereof,  may  find  expression 
either  in  commercial  treaties,  customs  tariffs,  or  possibly  the 
Treaty  of  Peace. 

(a)  Prince  Max  of  Germany  has  stated,  already, 

"At  the  peace  negotiations  the  German  Government 
will  use  its  efforts  to  the  end  that  the  treaties  shall 
contain  provisions  concerning  the  protection  and  in- 
surance of  laborers ;  which  provisions  shall  obligate 
the  treaty-making  states  to  institute  in  their  respective 
lands  within  a  prescribed  time  a  minimum  of  similar 
or  at  least  equally  efficient  institutions  for  the  security 
of  life  and  health  as  for  the  care  of  laborers  in  the  case 
of  illness,  accident  and  invalidism." 

(b)  Excepting  on  Federal  work,  such  questions  are  within 
the  rights  of  States  in  America ;  however,  such  institutions  cost 
money  and  if  the  cost  is  paid  by  the  manufacturer,  the  same 
must  enter  into  the  cost  of  production  and  hence  have  an 
ultimate  effect  in  the  competitive  prices  of  manufactures  in 
the  international  markets. 

Germany  has  gone  far  in  this  line  and  the  cost  is  great. 

The  American  manufacturer  has  done  much  in  the  way  of 
fixing  up  the  safety  devices  in  the  factory  and  insurance  sys- 
tems ;  however,  when  it  comes  to  maintaining  great  hospitals 
and  recuperation  places  in  the  mountains,  etc.,  Germany  has 
been  far  in  the  lead. 

American  Labor  has  seemed  to  prefer  high  wages,  and  to 
take  care  of  the  health  as  an  individual  matter. 

(c)  JAPAN'S  OBJECTIONS  TO  BRITISH  DOMINA- 
TION OF  RESOURCES  may  become  a  factor  in  the  Treaty 
of  Peace  and  other  commercial  adjustments  and  agreements. 

17 


In  September,  1918,  a  member  of  the  Japanese  Parliament 

stated, 

"In  England,  the  League  of  Nations  is  finding  strong 
support.  A  League  cannot  be  realized  when  Britain, 
which  possesses  so  much  of  the  earth,  adopts  an  exclu- 
sive policy  in  her  own  territory.  Should  all  the  natural 
resources  in  British  possessions  be  monopolized  per- 
manently by  their  own  nations,  it  would  seem  inevitable 
that  the  non-British  nations  would  pursue  a  militaristic 
aggressive  policy  against  her.  America  is  fighting  to 
safeguard  the  independence  and  rights  of  the  small  na- 
tions, it  claims.  This  must  mean  that  the  small  nations 
are  to  be  given  the  right  of  developing  their  own  des- 
tiny without  molestation  or  interference.  It  is  not  cal- 
culated to  guarantee  the  independence  and  rights  of 
small  nations,  for  strong  powers  to  monopolize  the  bene- 
fit accruing  from  their  vast  resources." 
Mr.  Sudsuki,  President  of  a  Japanese  friendly  society  and 

quite  well  known  to  many  American  labor  leaders,  recently 

stated, 

"It  is  not  difficult  to  predict  that  once  the  war  is 
brought  to  an  end,  advanced  industrial  countries  like 
Great  Britain  and  the  United  States  will  show  the  keen- 
est activity  in  trying  to  extend  their  commercial  inter- 
ests in  China,  the  South  Seas,  and  India,  which  countries 
at  present  time,  are  the  best  markets  for  Japanese  goods. 
In  such  an  event  Japanese  interests,  which  are  defective 
in  many  respects,  will  soon  be  depressed  and  a  panic  will 
set  in,  bringing  in  its  train  many  disputes  arising  from 
the  over-supply  of  labor  and  unemployment.  It  is  there- 
fore most  important  that  the  Government  and  the  people 
should  give  this  question  earnest  attention  and  devise 
plans  for  meeting  the  post-bellum  situation." 
The  member  of  the  Japanese  Parliament  stated, 

"The  policy  of  confining  a  large  number  of  people 
within  their  own  territory  of  limited  dimensions,  such 
as  Japan,  does  not  tend  to  assist  the  civilization  of  the 
world  nor  is  such  a  policy  calculated  to  bring  about  the 
peace  of  the  w^orld.  Japan  also  must  insist  that  Hawaii 
be  made  a  neutral  zone.  The  independence  of  the  Phil- 
ippines and  the  neutrality  of  Hawaii  are  not  questions 
which  are  important  for  their  own  sake  but  Japan  must 
contrive  for  their  realization  as  a  means  to  give  effect 
to  America's  principle  of  safeguarding  the  independence 
and  rights  of  small  nations  and  also  as  the  first  step  in 
the  direction  of  enforcing  the  open  door  principle  in 
regard  to  immigration.  Japan's  efforts  to  carry  this  great 
principle  at  the  peace  conference  may  pave  the  way  for 
the  establishment  of  a  great  international  ideal." 


THE  UNITED  STATES  DOES  NOT  EXTEND  TO 
::EIGN  countries,  entitled  to  the  most  favored  na- 
i  treatment,  Philippine  or  Cuban  concessions. 
Apparently  certain  interests  in  Japan  want  an  open  door  to 
Hawaii  and  the  Philippines  for  their  goods  and  people. 

The  United  States  abrogated  the  Russian  commercial 
treaty  of  1832  because  Russia  would  not  let  the  Russian-Ameri- 
can Hebrews  re-enter  and  other  Hebrews  enter  Russia  under 
an  American  passport.  If  questions  of  race  or  religion  are  to 
become  factors  in  the  peace  treaty  or  commercial  treaty  re- 
adjustments, the  problems  offer  many  difficulties  for  solution. 
The  Russian-American  commercial  treaty  was  abrogated  seven 
years  ago  and  no  solution  of  the  difficulties  which  caused  its 
abrogation  have  been  announced.  A  Hebrew  is  in  supreme 
power  in  Russia,  however,  at  present,  his  efforts  seem  confined, 
principally,  in  trying  to  drive  out  all  classes  of  American  citi- 
zens who  compose  our  army  which  is  trying  to  bring  order  out 
of  chaos  in  Russia,  which,  potentially,  offers  incalculable  trade 
opportunities  for  American  manufacturers,  especially  of  ma- 
chinery and  leather  products;  provided,  a  proper  commercial 
treaty  can  be  worked  out  to  wipe  out  any  animosities  created 
in  Russia  by  the  abrogation  of  the  1833  treaty  by  the  United 
States. 

24.  UNEASY  IS  THE  HEAD  THAT  WEARS  A  CROWN 
in  Europe  today;  uneasier  will  be  the  heads  of  the  Govern- 
ment representatives  who  sit  down  to  a  peace  table  to  write  a 
treaty. 

Seated,  there  will  be  personified,  the  hatreds,  passions, 
prejudices,  racial  and  religious  differences,  sacrifices,  maimed 
bodies,  spirits  of  the  noble  dead,  economic  wants,  desires  and 
hopes,  and  the  ambitions  of  warriors,  statesmen,  diplomats, 
merchants,  manufacturers  and  artisans.  Harmony  must  even- 
tually prevail,  but  how  it  will  come  about  and  in  what  definite 
form  is  a  matter  of  conjecture  today.  President  Wilson  has 
announced  the  great  general  principles  of  peace  and  life  there- 
after among  nations ;  how  these  principles  will  work  out  in 
a  practical  form  is  the  subject  of  deliberation. 

(b)  Presumably  the  immediate  questions  to  be  decided 
will  be  more  military  and  political  than  economic. 

(c)  How  far  the  Peace  Treaty  will  enter  into  economic 
fields  concerns  manufacturers  greatly.  How  far  the  League 
of  Nations  will  participate  in  economic  affairs  is  attracting  the 
minds  of  manufacturers  and  others. 

(d)  How  far  the  Peace  Treaty  and  the  League  of  Nations' 
provisions  will  effect  existing  treaties  and  trade  agreements  is 
difficult  to  surmise;  however,  it  is  important  to  carry  in  mind 
certain  facts  concerning  the  present  status  of  treaties. 

19 


(e)  COMPULSORY  ARBITRATION  TREATIES 
were  concluded  in  1914  and  1915,  by  the  United  States  with 
France,  Great  Britain,  Spain,  Russia,  Italy,  Norway,  Sweden, 
Denmark,  Portugal,  Peru,  Paraguay,  Uruguay,  Equador, 
Bolivia,  Guatemala,  Costa  Rica,  Honduras,  Haiti  and  China. 
Such  treaties  were  not  made  with  Germany,  Austria-Hungary 
or  Turkey. 

(f)  So  far  as  these  nations  enter  into  the  League  of  Na- 
tions, it  is  presumable  that  the  League  of  Nations'  provisions 
will  render  the  compulsory  arbitration  treaties  of  the  United 
States  unnecessary  and  naturally  they  will  stand  as  dead  letters ; 
however,  as  to  the  nations  that  do  not  become  a  party  to  the 
treaty  creating  the  League  of  Nations,  such  treaties  will  be 
available.  It  is  natural  to  suppose,  however,  that  the  stability 
created  by  the  League  of  Nations  will  eliminate  the  need  of 
invoking  the  compulsory  arbitration  treaties  between  the 
United  States  and  nations  which  may  not  be  a  party  to  the 
League. 

(g)  So  far  there  has  been  no  indication  that  the  organi- 
zation of  a  League  of  Nations  will  do  away  with  the  necessity 
of  separate  commercial  treaties  between  nations  or  commercial 
policies  adapted  to  the  economic  needs  of  each  country. 

25.  THE  AMERICAN  ATTITUDE  ON  TREATY  RE- 
ADJUSTMENTS, possibly,  can  be  surmised,  by  foreigners, 
who  grasp  the  American  way  of  looking  at  the  history  of  Eu- 
rope under  autocratic  kings;  and  the  facts  that  the  United 
States  can  meet  with  clean  hands  and  a  clear  conscience  any  na- 
tion that  thinks  it  wants  to  abrogate,  amend,  renew,  or  nego- 
tiate new  treaties  of  all  characters,  as  incidents  of  the  war, 
peace,  and.  reconstruction;  and  that  the  United  States  will 
come  out  of  the  war  just  as  it  went  in,  for  one  principal  pur- 
pose; namely,  to  protect,  perpetuate,  and  make  progress  for, 
the  democratic  principles  upon  which  the  Republic  is  founded 
and  rests  secure. 

Materials,  money  and  men,  it  has  lost,  not  gained.  No 
such  gains  were  expected,  wanted,  or  needed.  Just  as  the 
United  States  sympathized  with  the  nations  that  are  fighting 
against  the  "rule  and  ruin  autocracy"  in  Germany,  the  United 
States  sympathizes  with  these  nations  in  their  loss  of  materials, 
money,  and  men,  and  fully  appreciates  their  needs  of  ma- 
terials and  money  to  reconstruct  their  damaged  facilities,  in 
order  that  those  who  have  survived  may  pursue  happiness  and 
have  an  honorable  livelihood.  The  United  States  naturally 
wants  in  Europe  strong  nations  with  governments  absolutely 
controlled  by  the  citizens  thereof,  so  that  they  can  defend  the 
faith  of  those  who  believe  in  democratic  rule  rather  than  auto- 
cratic. 

Many  of  the  people  of  our  RepubHc  firmly  believe  that  the 
doctrine  of  the  divine  rights  of  kings  is  fast  sinking  into  ob- 

20 


the  greater  part  of  Europe  will  have  gov- 
unconditionally  by  the  people  and  peace 
everlasting,  b<;cause  it  is  not  Hkely  that  countries  which  are  run 
by  the  citizens  thereof  will  war  with  each  other  over  the  pri- 
vate squabbles  of  the  citizens  thereof,  or  what  a  private  citi- 
zen of  one  may  do  to  the  head  officials  of  another. 

The  President  of  our  Republic  was  shot  by  Czolgosz. 

President  Roosevelt  did  not  cause  the  United  States  to  de- 
clare war  on  the  Poles  in  Europe. 

Twelve  just  men  condemned  to  death  the  one  guilty,  and 
millions  of  innocents  did  not  suffer  the  tortures  of  hell  to  atone 
for  the  crime  of  one  fanatic. 

A  stupid  peasant  shot  a  super-prince  and  tnereafter  two 
kings,  apparently  believing  that  mere  men  were  challenging  the 
divine  right  of  a  "near-king,"  ordered  war  against  all  the  guilty 
^jeasant's  innocent  countrymen  and  thereby  caused  hell  to  reign 
on  earth  for  many  millions  of  innocent  men,  women,  and  chil- 
dren in  many  countries. 

Such  are  the  methods  of  a  republic  and  autocracies ;  it  has 
been  ever  so  in  Europe  because  history  reveals  that; 

(a)  The  war  of  WilHam  the  Conqueror  against  France 
was  precipitated  by  the  King  of  France  who  made  personal 
reference  to  the  obesity  of  the  enormously  strout  and  there- 
fore exceedingly  sensitive  William  who  was  so  stung  to  the 
quick  that  he  swore  his  favorite  oath, 

"By  the  splendor  of  God,  I  will  light  one  hundred 
thousand  candles  when  I  go  to  my  churching  mass," 

and  proceeded  to  personally  lead  his  army  against  France. 

He  died  shortly  after  from  a  wound  inflicted  by  the  pom- 
mel of  his  saddle. 

(b)  The  Hundred  Years'  War  resulted  largely  from  the 
kings  of  England  and  France  taking  up  the  petty  quarrels  of 
their  rival  fishermen. 

(c)  The  Thirty  Year's  War  was  caused  by  the  attempt  of 
the  King  of  Bohemia  to  avenge  the  pitching  from  a  window  into 
a  moat,  of  two  of  his  favorites  who  had  engaged  in  a  religious 
squabble,  which  by  the  King's  actions,  was  turned  into  a  pub- 
lic war  that  was  one  of  the  bloodiest  in  history. 

(d)  The  length  of  the  Seven  Years'  War  resulted  largely 
because  Mme.  de  Pompadour,  a  favorite  of  Louis  XV.  of 
France,  hated  Frederick-the-Great  of  Prussia  who  resented 
this  favorite's  flattering  messages,  and  thereby  caused  her 
animosity  which  led  her  to  influence  Louis  XV.  to  join 
Austria  against  Prussia. 

(e)  The  Franco-Prussian  War  of  1870  was  precipitated 
by  a  trivial  action  of  King  William  of  Prussia,  who  met  the 
French  Amabssador  on  the  promenade  of  a  watering  place. 
The  Ambassador  brought  up  a  dead  diplomatic  subject,  the 
King  referred  the  Ambassador  to  his  Chancellor,  turned  on  his 


21 


heel  and  walked  away  without  attaching  then 
to  the  incident;  however,  the  version  was  gis'^^y-    'U.   '.-     ^-e 
effect  that  the  King  had  insulted  the  Ambassador  ot  France. 
France  was  aflame  and  cried,  *'On  to  Berlin."     Napoleon  III 
declared  war  and  the  Germans  came  on  to  Paris. 

(f)  The  Russian- Japanese  War  was  influenced  somewhat 
by  the  general  attitude  of  Nicholas  toward  everything  Jap- 
anese. When  Nicholas  was  Czarowitz  he  visited  Japan  where, 
in  a  sacred  temple,  a  religious  fanatic  assailed  him  with  a 
club  and  dagger.  Prince  George  of  Greece  knocked  the 
fanatic  down  and  saved  the  future  Czar  of  all  the  Russias, 
who,  when  he  ascended  the  throne,  joined  with  France  and  Ger- 
many to  depRve  Japan  of  the  fruits  of  victory  over  China,  and 
later  hstened  to  those  counselors  who  argued  in  behalf  of  a 
war  between  Russia  and  Japan. 

The  American  attitude,  expressed  in  the  resolutions  of  the 
Chamber  of  Commerce  of  the  United  States,  in  reference  to  a 
popular  form  of  government  for  Germany,  must  be  discounted 
by  anybody  who  seeks  to  alter  the  commercial  relations  of  the 
United  States  with  any  country  which  is  dominated  by  an  auto- 
cratic king. 

It  is  essential  that  treaty  makers  grasp  why  the  free  people 
of  America  prefer  the  will  of  a  free  government  to  the  whim 
of  any  autocratic  king  and  understand  the  predisposition  of  a 
democracy  in  making  treaties  with  government,  of,  by,  and  for 
the  people. 

26.  SPECIFICALLY  WHAT  THE  UNITED  STATES 
WILL  DO  RE  TREATIES  incident  to  war,  peace,  reconstruc- 
tion, and  thereafter,  is  a  subject  of  the  future;  however,  a 
study  of  the  facts,  figures,  and  opinions,  you  have  heard,  may 
naturally  lead  one  to  beHeve  that  the  substantial  indications  are 
to  the  general  effect  that  the  United  States : — 

(a)  Will  come  out  of  the  war  one  of  the  richest  and 
most  powerful  nations  in  history. 

(b)  Has  no  desire  or  design  to  use  that  power  or 
wealth  for  any  purposes  other  than  beneficial  to  the  gen- 
eral welfare  of  mankind. 

(c)  Will  gain  solely  what  it  entered  the  war  for: — 
the  protection,  perpetuation,  and  progress  of  the  demo- 
cratic principles  upon  which  the  Republic  is  founded. 

(d)  Will  not  discriminate  economically  or  other- 
wise between  nations  that  respect  and  observe  the  prin- 
ciples, that  the  humblest  citizens  thereof  possess  the 
inahenable  rights  of  fife,  liberty,  and  the  pursuit  of  hap- 
piness and  from  such  citizens  a  government  derives  its 
just  powers. 

(e)  Will  not  enter  into  any  treaty,  alliance  or  con- 
federation to  give  preference  by  regulations  of  com- 

22 


je  in  order  to  practice  discriminations,  as 
^..,.^....   lations. 

(f )  Will  not  propose  changes  in  commercial  rela- 
tions or  treaties  until  the  same  have  been  considered 
scientifically  by  experts  familiar  with  the  economic 
needs  of  the  country,  the  diplomatic  relations  between 
the  countries  involved,  and  the  character  of  legislation 
needed  to  meet  the  terms  proposed. 

(g)  Will,  in  making  any  commercial  readjustments, 
seek  to  secure  concessions  especially  adapted  to  the 
United  States  products  rather  than  to  depend  upon  con- 
cessions embodied  in  treaties  with  other  countries  which 
may  change  their  treaty  relations  without  regard  to,  or 
for,  the  economic  needs  of  the  United  States  and  to 
accomplish  the  foregoing,  will  want  distinctive  sched- 
ules and  highly  specialized  classifications  in  order  to 
prevent  any  discriminations  against  typical  American 
specialties  and  to  eliminate  the  innumerable  assimila- 
tions to  other  articles  in  which  the  United  States  has 
little,  if  any,  interest  in  common. 

(h)  Will  not  favor  the  continuation  after  the  war  of 
any  war  restrictions  on  exports  and  imports ;  except, 
possibly,  for  a  short  time,  in  case  such  restrictions  are 
imperative  to  adjust  abnormal  exchange  situations,, 
transport  troops  home,  and  to  equitably  ration  essential 
materials  in  the  event  the  supply  thereof  cannot  keep 
up  with  the  demand  therefor. 

(i)  Will  liberally  and  adequately  cooperate  with  the 
nations  seeking  to  reconstruct  their  war-damaged  in- 
dustries for  the  purpose  of  giving  remunerative  em- 
ployment to  the  artisans  thereof. 

(j)  Will  not  lend  itself  to  measures  designed  to  en- 
able foreign  employers  to  pile  up  unreasonable  profits 
from  industry  or  commerce. 

(k)  Will  so  use  its  resources  as  to  try  to  preserve 
the  standard  of  living  of  the  American  workmen. 

(1)  Will  not  become  a  party  to  any  treaty  or  trade 
arrangement  incompatible  with  the  foregoing  principles 
or  with  the  political,  economic  and  other  principles  an- 
nounced as  essentials  of  peace  by  the  President  of  the 
United  States  of  America. 

Washington,  D.  C, 
October  21,  1918. 


23 


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DUE  AS  STAMPED  BELOW 


FC 
5C" 


SEP  3  0  ?nn:^ 


U 


DD20  15M  4-02 


THE  UNIVERSITY  OF  CALIFORNIA  LIBRARY 


5^':  .v-':C.: 


m 


A' 


